Peter Schiff Warns: The Dollar Is Losing Its Role as a Store of Value

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01. Welcome back to RLA Radio. I'm your host Dennis Tubberen. I'm chatting today with Mr. Peter Schiff. Peter is the chief market strategist at Europacific Asset Management. The website is europac.com. He is also the founder of Shift Gold. That website is shiftgold.com. I'll give those again before our conversation is over.

02. Peter, welcome back to the program and thank you for joining us today. Well, my pleasure and thanks for inviting me on. So, Peter, I think I first interviewed you uh time goes by so quickly, six, seven, eight years ago, something like that. And at the time you said that uh the biggest risk to financial security and I may be paraphrasing is that uh the US dollar is going to be devalued.

03. Since that time uh we now have the US dollar index uh making new lows uh I think in the last 14 or 15 years. You can correct me if I'm wrong. Precious metals have certainly reflected the devaluation of the dollar. So first good call. Second and more importantly where do we go from here? Well, first of all, all the fiat currencies in the world have devalued.

04. That's why the price of gold has gone up so much. So, when we spoke 8 years ago, maybe gold was 1,200,500 somewhere in there. And it's tripled. It's now about 5,000. But the dollar hasn't lost that much ground against other fiat currencies. But the main reason that the cost of living has gone up so much is because the dollar's value has gone down.

05. The purchasing power of our money has gone down. But then so is the purchasing power of the euro and the pound and the yen. And and that's why consumer prices have risen all around the world, not not just in the United States. But now the dollar is finally starting to fall against other fiat currencies.

06. So, it hit a fouryear low last week and it hit an all-time record low against the Swiss Frank. And so, this indicates to me that it's now getting a lot more serious. And we're going to see another round of consumer price increases that's probably going to be much greater than what we experienced in the past few years, you know, under President Biden.

07. Uh so if Americans thought that inflation was bad then I mean just wait till they see what's coming next. So Peter I want to digress for just a moment because uh a lot of the metals uh price correction last week which I think looked like a technical correction to me. You can you can correct me if you have a different opinion.

08. But a lot of that was attributed to Worsh being nominated as the chair of the Federal Reserve who is uh allegedly or historically hawkish on inflation. What do you make of that nomination? Well, I mean, I think if he was going to be hawkish on inflation, he wouldn't have gotten the nomination. So, I think the whole story is BS.

09. Uh, but I think it was orchestrated. I think the Trump administration had something to do with that attack on gold and silver. I don't think it was just random. I think there was inside information and I think they used that to kind of manipulate the market down to try to take some of the wind out of the sales of the gold and silver market because that really is a canary in the coal mine.

10. It was indicating a big problem with the dollar, a big problem with the bond market. And so, you know, they wanted to diffuse the bomb, but they didn't diffuse it. Maybe they just lengthen the fuse or something. But um the market is snapping back and I think before too long we're going to be hitting new highs in in the in the precious metals.

11. I I I don't think Walsh is uh you know going to be an inflation hawk. I I think maybe they're trying to position him as if he's an independent guy. Uh that way when he does exactly what Trump wants, it won't look like he's pulling the strings of a puppet. But I believe that's what's going to be happening.

12. So, it's probably all a part of a big plan to try to deceive the world into thinking that um whatever decisions uh Walsh makes are economically uh justified rather than politically motivated. So, Peter, you just mentioned that you expect we'll likely make new highs in gold and silver moving ahead. Um, fiat currencies historically speaking can only be devalued until we hit this tipping point of no confidence.

13. So, um, how far are we from that point do you see us getting there? How do you what's the endgame here in Peter Schiff's view? Well, I don't know when we get to a complete lack of confidence in in the dollar to use it as a medium of exchange. I think we're already at the point where people don't have much confidence in it as a store of value.

14. So, not that many people are just socking away dollars. Uh people aren't buying long-term treasuries, immunity bonds. Uh they're doing something else with the money, but they still use it, you know, to pay their bills. And if you're a store, you know, you're a business, you'll accept dollars, but you're not going to hold on to them for a long period of time.

15. And in fact, foreign central banks are clearly losing confidence in the dollar because they don't want it either. In fact, they'd rather hold gold and earn no interest on it than hold dollars and buy treasuries and earn 4% interest. So, the lack of confidence in the dollar as a store of value is already here.

16. And I think more people are going to lose confidence and you're going to see uh the dollar go down more. But, you know, if we get to the point where nobody even wants to take it, where you go to a store they and they and they don't want it. I mean, I don't know if it's going to get that bad, but but it could.

17. Um, but it's certainly going to be like a hot potato where you may take dollars, but you have to spend them very quickly. You can't, you know, you can't hold on to them for, you know, an extended period of time um because they'll just lose value too fast. So, Peter, what do you make of the new bricks unit, the the 40% goldback currency?

18. Is is that going to play a big role in international trade and displacing the dollar? What's your take there? Well, you know, I I think the dollar is already being displaced by gold as a, you know, reserve asset for central banks. As far as um for bilateral trade, uh will the world trade in another currency that's backed by gold?

19. Will they will they settle uh their payments in gold? It's hard to say, but I think what's what's sure is that they're going to move away from the dollar. So, I think the dollar is losing ground now as a reserve asset and it will be losing uh as a funding currency and as a currency for crossber trade.

20. And so, the dollar's role is going to be diminished substantially over the years. And that is a gamecher for the US because that means our ability to export our inflation is going to go away which means we're going to be stuck with our own inflation and prices are going to be much much higher. Um and the shelves are going to be a lot emptier.

21. So there'll be a lot of stuff you can't afford but there won't be much of it. I'm chatting today with Mr. Peter Schiff. He is the chief market strategist at Europacific Asset Management. He's also the founder of Shift Gold. You can learn more at europac.com and shiftgold.com. So, so Peter, this uh whole idea of the US has a a K-shaped economy seems to be uh valid and it seems to be that the K is getting wider.

22. Those with assets are doing pretty well. Uh the latest consumer confidence index number was down. So, the bottom 50% of the population is struggling. Um, at what point do you think that the K-shaped economy goes away? At what point do the affluent, the top 10% uh maybe quit spending at the level they're spending?

23. Well, I think that the the the top uh income people, the top wealth, uh they're going to get taken down quite a few pegs if they're not invested properly, which most of them are not because I think US dollar denominated assets are going to be considerably marked down. So, US stocks, US bonds, US real estate.

24. So to the extent that wealthy Americans have most of their wealth in in those assets, they're going to be a lot less wealthy. Uh they may still be wealthy, uh but in you know, in the scheme of things, their wealth will be greatly diminished. I think that if they're doing what I'm doing or what I'm doing with my clients, if they own a lot of gold and silver, if they own a lot of foreign stocks, and that they've gotten their money out of US dollars, then they'll not only stay wealthy, but they'll be a lot wealthier.

25. So Peter, when you say invested properly or invested in in in foreign stocks, are there some currencies out there, are there some economies that you would consider to be bright spots? And if so, what are they? Yeah. Well, you know, I think the emerging markets look particularly attractive and we have an emerging market fund, but I think they're going to be the primary beneficiaries of the dollar's demise because the emerging market economies have a lot of US dollar debt.

26. And so when the dollar crashes, it's like having that debt forgiven. Also, as their currencies rise, that puts downward pressure on consumer prices in their country. Uh, which means their consumers have a lot more buying power and so you get a lot of economic growth. uh and capital starts to flow into those countries, investment capital and a lot of the capital that might otherwise have gone into the US to finance our deficits, you know, can be invested productively in emerging market economies.

27. So, I think you're going to have a real economic boom uh in that part of the world as we have a massive economic bust uh here in the United States. So Peter, what's your take for uh what's your forecast for for US stock market indices? Looking at the Dow, looking at the S&P, uh certainly looking at the S&P has been held up by just a handful of largely AI related stocks.

28. Uh are you looking for a correction in stocks soon? Yeah. Well, look, I think the US stock market is expensive and it's been expensive for a long time. uh and it easily could go down especially you know the NASDAQ uh and the S&P you know more than the Dow. Um but you know my forecast for the US stock market has been the same pretty much for this entire decade which was that the stock market would go up in dollars but down in real money down in terms of gold and over the past 25 26 years the Dow Jones is down by more than 70% if you price it in gold and that really tells you what's happening.

29. So the market's going down, but because the value of our money has gone down by more than the value of stocks, it only appears that stocks are going up, right? It's like if I if I measure my height with a 10-in ruler, all of a sudden I'm going to be, you know, taller. But I'm not really taller. I just got a smaller ruler.

30. Uh and so you're not wealthier if you have US stocks. You're just measuring your wealth with a smaller dollar. But if you look at it with gold, you can see how much poorer you are because you have 70% less gold today for your stocks than you had 25 years ago. And I think that trend is going to continue.

31. So I don't know for sure the US stock market could go up or down in dollars, but what I do know for sure is that it will keep going down in gold. Do you have an ultimate forecast for gold and silver? I mean, I guess that depends largely on how much and how how how intensely the dollar devalues, but but how much higher do you see prices going?

32. Well, I mean, there's really no ceiling because there's no floor to the dollar, but if you want to relate it, you know, to the Dow, I mean, right now it's around 10 to one, right? The Dow is worth about 10 ounces of gold. It was worth over 40 ounces of gold, you know, back in 2001. I think it's going to go down to about two, maybe less.

33. So, you know, who knows where that could be, right? It could be the Dow 100,000 and gold's 50,000, right? That would still be 2 to1, right? And people might think, well, I'll be really rich if the Dow doubles to 100,000. Yeah. Not if gold's 50,000. It won't be. Um, but yeah, so I don't really know. May, you know, maybe the Dow goes down to uh 40,000, right?

34. And gold goes up to 20,000, right? That would do it, too. But that would be with the Dow going down. gold doesn't go up as much, but the relationship is is what's important. Great. So, talk a little bit, if we could digress a minute, about real estate. You mentioned that earlier as an asset that uh will likely be marked down.

35. Uh this seems to have turned into a buyer market now with I think 600,000 plus more buyers or excuse me, sellers than buyers. Um what's your forecast for uh residential real estate? Well, real estate is a bubble. I mean, real estate prices are at least 30% too high nationwide. The Trump administration's main goal, despite the fact that there's an affordability crisis in housing, is to prevent real estate prices from coming down.

36. In fact, Trump has actually stated that he doesn't just want prices not to go down. He wants them to keep going up. So, his goal is to take a bubble and make it even bigger. But, you know, the market wants to lower real estate prices. But Trump doesn't want that because that may solve one problem by making homes affordable.

37. It creates a whole new problem because people that own homes now see their wealth go down. And, you know, we know from past experience that when people lose their home equity, they may stop making their mortgage payments. Uh they slow down on their spending. So, you know, if we see a lot of people get, you know, lose their home equity, that's going to cause a lot of problems for the banks and for the economy.

38. Uh, so, you know, it's basically, you know, between a rock and a hard place, you know, and and what their solution is is, well, let's make credit cheaper. Let's just try to get interest rates down and and maybe have a 100redyear mortgage or a 50-year mortgage. Let's have, you know, lower down payments.

39. Let's let people take the money out of their 401ks to to make a down payment, right? He's trying to figure out how to make overpriced homes, you know, affordable. Uh just to preserve the bubble, but you know, he the the policy is misguided. It won't work. Uh it just causes more economic harm. Um yeah, I mean, the fact that we have a housing bubble is a problem.

40. You know, that's why the Fed never should have inflated it, but they did. Uh, and they did it with the help of Congress. It's not, you know, takes two to tango. Congress ran all the deficits that the Fed monetized and the Fed kept interest rates low because there was so much debt. And so, here we are.

41. Um, but you know, prices are going to come down. Um, regardless of what the government does, if they create enough inflation, then maybe prices won't go down in dollars, but you know, in gold, in silver, you know, prices will crash. And, uh, you know, ultimately the people who own these overpriced homes aren't going to feel so rich when they see what their grocery bill looks like or their utility bill, right?

42. It's not going to matter, you know, that their house has a big number on it when they can't afford uh, you know, to to turn on the the electricity. Right. Peter, let's finish where we started. You had mentioned that u nobody's buying US treasuries long-term. I think that all of the government bond auctions that that I have seen, I think 80% of the treasuries that are sold have maturities of two years or less with a lot at, you know, in the in terms of weeks.

43. At what point does the Fed go back to full-blown QE to uh just ensure the US government can sell their bonds? Yeah, you know, I think sometime this year. I mean, they already went back to QE uh late last year without admitting it. And the distinction without a difference that they seem to have made is that they're buying short-term bonds now and therefore that's not QE.

44. But, you know, they're printing money and they're they're buying government debt. Seems like QE to me. But it's only a matter of time before they extend the maturities. And I think the minute you see yields on a 10-year Treasury get up above 4 and a.5%. Right now we're like four and a quarterish. I think if we get above four and a and a half, that's when the Fed's going to step in and and and and start buying those bonds because I don't think they want to let it get to 5%.

45. I think all hell would brave clues if the the yields got up there. And of course, that would send mortgage rates way up. Uh and that's the opposite of what Trump is trying. In fact, he's also got like a quasi QE going on with the GSC's where he ordered Fanny and Freddy to go into the market and buy $200 billion worth of mortgage back securities.

46. Well, the clock says Peter, we're going to have to leave it there. My guest today has been Mr. Peter Schiff. He is chief market strategist at Europacific Asset Management. The website europac.com, also the founder of Shift Gold, the website shiftgold.com. Peter, always a pleasure to catch up with you.

47. I can't believe 18 minutes went by that quickly, but thank you for joining us. Love to have you back down the road. Oh, anytime. Anytime.